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Swedish crown hits 8-day high after Riksbank recommends extra lending control
May 24, 2017 / 10:27 AM / 4 months ago

Swedish crown hits 8-day high after Riksbank recommends extra lending control

LONDON, May 24 (Reuters) - Sweden’s crown rose to an 8-day high on Wednesday after the Swedish central bank called on regulators to introduce a 5 percent leverage ratio requirement on Sweden’s banks to strengthen them against potential shocks.

In its semi-annual stability report, the Riksbank warned that rising household debt was a serious threat to Sweden’s economy and called on the Financial Supervisory Authority to introduce the extra requirement from the start of next year.

The Swedish crown rose as much as 0.2 percent to 9.7150 crowns per euro after the report came out, up from 9.7480 crowns per euro earlier. It then fell back to 9.7285 crowns, just 0.1 percent higher on the day.

“First of all the six month extension on QE (quantitative easing) has raised the perception monetary policy is on autopilot for the rest of the year,” said Josh O‘Byrne, currency strategist at Citi, commenting on the move.

“The macroprudential arena was thought to be much less relevant for monetary policy given their emphasis on (supporting) inflation at a time when we have seen strong growth in the economy and asset prices. So the impact has been minimal this morning.” (Reporting by Patrick Graham and Ritvik Carvalho)

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